RBS Hands Millions of Pounds in Shares to Top Executives as EU Bonus Cap Looms

RBS is 81% owned by UK taxpayers after it was bailed out during the 2008 financial crisis.Reuters

State-owned bank RBS has paid out millions of pounds' worth in shares to 10 of its senior executives in an effort to obey incoming European Union rules that cap bankers' bonuses.

The payout, totalling £3.53m ($5.9m, €4.44m), was part of a "fixed share allowance" for top staff under a new remuneration regime at RBS. This entitles executives to an annual bonus paid in shares and worth up to the total value of their salary.

Under new EU rules, due to come into force in 2015, banks will only be able to pay out annual bonuses worth the equivalent of a year's salary of the employee receiving one. This can be increased to twice the salary if shareholders approve it.

RBS had originally planned to go for the 200% option, but was blocked from doing so by UK Financial Investments, a public body that manages the 81% stake held by British taxpayers who bailed out the bank with £45bn to prevent it from collapsing during the financial crisis.

The share awards were paid out for the eight months to the end of August 2014. The biggest payout of £533,334 went to Rory Cullinan, who heads up the internal 'bad bank' in which toxic assets built up before the crisis are being wound down.

Christopher Sullivan, deputy chief executive of RBS, received the second biggest amount at £466,668.

In 2013, RBS made a £8.2bn loss, as its work to restructure the bank and litigation costs relating to past bad behaviour weighed it down. But the underlying performance is improving.

Operating profit in the first half of 2014, adjusted to exclude restructuring, litigation and conduct costs, more than doubled to £3.36bn from 2013's £1.6bn.